Beleaguered tourism industry drives Egypt to cancel AfDB $140 mln loan

Egypt has cancelled a $140 million loan signed with the African Development Bank (AfDB) to upgrade Sharm El-Sheikh airport, Egyptian international cooperation minister announced Monday.

Minister Sahar Nasr further said the continued decline in tourism for Sharm El-Sheikh has forced the government to reconsider carrying out the airport upgrade project in the current time.

Egyptian government is keener to implement other projects with high-priority such as the development of slums and financing youth-led businesses, Nasr added.

Egypt has signed earlier in 2015 a $140 million loan agreement with the AfDB to finance a project to increase Sharm El-Sheikh Airport’s capacity, involving $90 million from the bank, and $50 million from the Africa Growing Together Fund (AGTF).

Tourism is a key source of income for the Egyptian economy but the number of tourists fell 40 percent in the first quarter of 2016, partly hurt by the flight ban keeping British and Russian tourists away.

The Airbus A320 crashed on May 19 on its way to Cairo from Paris, killing all 66 people abroad, was the third blow since October to Egypt’s travel industry, which is still suffering from the 2011 uprising that ended Hosni Mubarak’s 30-year rule.